Research and Development Tax Incentive
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Overview of the Research and Development Tax Incentive program
The Research and Development Tax Incentive (R&DTI) program is a government-funded program that provides a tax offset to businesses for conducting eligible Research and Development (R&D) activities. Administered by the Australian Tax Office and AusIndustry, this generous incentive is open to all eligible entities, regardless of size or sector.
The program is designed to encourage businesses to invest in innovation and new technologies, which can create jobs and drive economic growth. It is a valuable resource for businesses looking to invest in R&D and grow their business, providing financial support and access to specialist advice.
What R&D Tax Incentives are available?
The R&D Tax Incentive is a tax offset, which means that businesses can reduce their tax bill by the amount of the incentive. The value of your offset will vary, based on turnover and when the R&D was conducted.
From 1 July 2021, the offset for eligible R&D expenditure is based on a premium on top of your corporate tax rate.
- Turnover of less than $20 million: Eligible entities can claim a refundable R&D tax offset that is equal to the corporate tax rate plus an 18.5% premium. As this incentive is refundable, businesses can receive a cash refund if they are not liable for income tax.
- Turnover of $20 million or more: Eligible entities can claim a non-refundable R&D tax offset that is equal to the corporate tax rate plus an incremental premium. This premium, which ranges from 8.5%-16.5%, is based on your R&D intensity. This is the percentage of your eligible R&D expenditure as a proportion of your total expenditure for the year.
Claims for eligible R&D conducted up to 30 June 2021 are subject to the following tax offset rates.
- Turnover of less than $20 million: Eligible entities can claim a 43.5% refundable R&D tax offset. As this incentive is refundable, businesses can receive a cash refund if they are not liable for income tax.
- Turnover of $20 million or more: Eligible entities can claim a 35.5% non-refundable R&D tax offset.
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How do I qualify for the R&D Tax Incentive?
To qualify for the incentive, businesses must carry out eligible research and development activities and spend at least $20,000 on these activities each year. If your notional deductions are less than $20,000 per year, you can still apply for the offset, however your R&D must be conducted by a Research Service Provider (RSP).
Eligible R&D activities can include developing new products or processes, improving existing products or processes, and conducting feasibility studies.
Maximise your R&D Tax Incentive claims
If you’re looking to maximise your R&D Tax Incentive claim, or if you simply want the peace of mind that comes with knowing everything is being taken care of for you, then contact us today. We have a 100% success rate and over $230 million in claims processed to date – so we know what we’re doing. Let us take the hassle out of applying for the incentive and leave you free to focus on what you do best: running your business.
Eligible R&D activities can include developing new products or processes, improving existing products or processes, and conducting feasibility studies.
